Quant Mutual Fund has released a statement following a media report that implied an investigation by the Securities and Exchange Board of India (Sebi) into alleged front-running activities. The company has reassured investors of its dedication to cooperation and transparency. The statement emphasized that Quant Mutual Fund is a regulated entity and is fully committed to collaborating with the regulator. Additionally, the company highlighted its significant growth and successful performance, managing assets totaling nearly Rs 1 lakh crore across various schemes, including a small-cap scheme that has delivered a 68% return over the past year.
Details of alleged front-running case
The investigation conducted by Sebi into Quant Mutual Fund involves allegations of front-running, an illegal practice where trades are executed based on privileged information before larger clients carry out those trades. According to
The Economic Times, Sebi’s probe includes search and seizure operations at Quant’s head office in Mumbai and at the addresses of suspected beneficiaries in Hyderabad. Sebi’s surveillance system alerted them to transactions that closely resembled those of Quant Mutual Fund, raising concerns of information leakage.
A source close to the investigation stated that the transactions of the suspected entities matched with those of Quant Mutual Fund, prompting Sebi to suspect that trade information may have been leaked by a dealer from Quant or a broking firm handling the fund’s orders. During the search operations, Sebi confiscated digital devices such as mobile phones and computers to gather evidence. Based on initial findings, Sebi intends to interrogate individuals who had access to Quant’s trade information, with a focus on executives who were aware of the size and timing of orders.
The investigation has had an impact on market sentiment, leading to a significant decline in small and midcap stocks on Dalal Street. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, remarked that the Sebi investigation into Quant Mutual Fund has slightly dampened market sentiment.